Between Laugarvatn and Þingvellir (5-6 km west of Laugarvatn) you'll find a large grassy area, Laugarvatnsvellir, which is a former lake bottom. This is one of the more special hot spots in south Iceland. In former times our ancestors rested their horses in this place or spent the night during their travels.
Above the flatlands are caves which were occupied only one century ago. A married couple stayed there and even had a child in the caves! - You will probably notice that the caves are a good shelter for sheep and in fact they were used as such by sheep and shepherds during the centuries. Be careful... some believe the caves are haunted...
